Mediation is mandatory on paper. Is it mandatory in practice?

Mediation has become an important mechanism for resolving disputes outside traditional litigation. In India, the Mediation Act, 2023 provides a comprehensive legal framework for mediation, while Section 12A of the Commercial Courts Act, 2015 makes pre-institution mediation mandatory for specified commercial disputes where urgent interim relief is not contemplated. However, the question remains whether mediation is truly mandatory in practice or merely a procedural formality. This article examines the gap between the legal requirement of mediation and its practical effectiveness.

The already overburdened courts of this country should not be where dispute resolution begins; rather, it should be where disputes end after alternative methods of resolving disputes have been considered and tried.

Mediation involves a third person, or mediator, intervening in a dispute to help the parties negotiate a jointly acceptable resolution of the issues in conflict. The mediator meets with the parties in a neutral location where they can discuss the dispute and explore a variety of solutions. Each party is encouraged to be open and candid about his/her point of view. As a neutral third party, the mediator can view the dispute objectively and help the parties consider alternatives and options they might not have considered. 

Over the last 20 years, legislative interest in promoting mediation as an alternative to litigation has increased to reduce the burden on courts in India and make India an attractive business destination. To this end, amendments were introduced in the Code of Civil Procedure, 1908 in 2002.  The Arbitration and Conciliation Act, 1996, and the Companies Act, 2013, also allow parties to refer disputes to mediation. India was one of the first signatories to the United Nations Convention on International Settlement Agreements Resulting from Mediation in August 2019, pursuant to which the Government has tabled the Mediation Bill before Parliament for consideration and passed the Mediation Act, 2023. Generally, mediation is of two types: voluntary and mandatory.  

Voluntary mediation also refers to pre-litigation mediation, governed by section 5 of the Mediation Act, 2023, which permits parties, by mutual consent, to agree to mediation before commencing legal proceedings. The provision therefore reflects an important distinction between encouraging mediation and compelling parties to settle their disputes.

Section 5 is significant because mediation derives its legitimacy from party autonomy. Unlike adjudication, where a court ultimately imposes a binding decision, mediation allows the parties themselves to determine whether a settlement is acceptable. Even when parties participate in mediation, they are not obligated to reach a settlement merely because the process has begun.

Mandatory mediation is included under Section 12A of the Commercial Courts Act, 2015 (“CCA”), which has little to no data on the efficacy of the legislation making mediation mandatory, with an exception for urgent relief. Section 12A requires parties to engage in pre-litigation mediation before initiating a commercial case, unless the litigation is urgent8. The Supreme Court explained this provision in Patil Automation v Rakheja Engineers (2022), stating that under Section 12A, mediation is compulsory and that courts may dismiss cases submitted without mediation. This ruling made mediation an obligatory procedure for commercial conflicts to resolve disputes amicably, but it cannot compel parties to accept terms they do not agree to.  The introduction of Section 12A of the Commercial Courts Act, 2015 and the Mediation Act, 2023 has strengthened the legal position of mediation in India. However, making mediation legally mandatory does not necessarily mean that parties will genuinely participate or settle their disputes.

Even where the law requires parties to undergo mediation, they can still refuse to settle. This creates an apparent paradox: the process may be mandatory, while the outcome remains voluntary. This forms the crux of the debate surrounding mandatory mediation: both laws are effective; the former encourages voluntariness, while the latter imposes mediation. 

The major problem is that, despite these laws, mediation works differently in practice; on paper, a party can go to mandatory mediation, but that doesn’t mean settlement is mandatory. The main issue is whether the party acted and participated in good faith regardless of the outcome, but in practice, parties enter mandatory mediation mainly to avoid the procedure before filing litigation in court.

Further, the court cannot impose excessive obligations for mandatory mediation and settlement, as this may affect the overall mediation process and result in a biased or unfair outcome in the dispute in question.

Mandatory mediation is introduced in commercial disputes to reduce the burden on the commercial court, as matters can be resolved outside court. To build trust, mediation has to become part of the mindset to prefer mediation over trial. This issue can be addressed by understanding the challenges and why mediation has not gained the popularity of other ADR mechanisms. 

Mediation and its challenges

Despite all statutory provisions and judgments highlighted above, mediation has not become a primary mode of dispute resolution. Several issues remain, including the lack of a regulatory body, unclear procedural guidelines, limited awareness, poor-quality infrastructure, and inconsistencies & discrepancies across different legislations on mediation.

According to Justice Narasimha (Raksha Devi v. Parkash Chand, 2025), many mediators presently come from the legal profession and therefore need to develop skills distinct from those used in adversarial advocacy. He also emphasised the need for a permanent institutional mechanism and mediators with subject-matter expertise. In this regard, he observed that even technically complex disputes involving insolvency, acquisition, corporate matters and trademarks could be effectively mediated, depending on the mediator's expertise.

Further, Justice Narasimha noted, the success of mediation cannot be assessed merely by counting the number of settlements. He said he would assess it by “how well we have formulated our institutional mechanism for mediation in times to come”, describing the present exercise as “a stepping stone” in a continuing process.

The success of any programme depends on understanding its theme or object. First and foremost, an impediment is the acceptability of mediation and conciliation as an effective, alternative dispute resolution mechanism. Mediation proceedings always require a congenial atmosphere. The existing infrastructure of mediation centres does not provide adequate accommodation and appropriate facilities for them to function effectively. The inherent shortage of funds for the proper functioning of mediation centres, including costs for training, honoraria, and basic infrastructure, creates an additional hurdle for an already burdened institutional structure. Many district centres lack dedicated space, areas for confidential conversations, adequate staffing and proper scheduling systems, unlike urban mediation centres that are highly sophisticated, professionally administered and technologically equipped. These factors can also explain regional disparities in outcomes. 

There is no gainsaying that the quality of mediators and the mediation process are essential for mediation to become an effective tool for timely and amicable settlement. Public awareness, sensitisation of all stakeholders and trust-building are the prerequisites that cannot be short-circuited. Because of a dearth of suitably trained and experienced mediators in the court-annexed mediation centres, heavy reliance was placed on newly minted, freshly trained mediators, who were instructed in fast-track mode to meet demand. This raises concern that using inexperienced and insufficiently trained mediators at high volume may produce settlements that are technically recorded as successes but not durable or fair.

The philosophy of mediation is built on party autonomy, informed consent and self-determination. Although mandatory mediation is generally accepted as the norm for court-referred mediations, and some statutes (e.g., the Commercial Courts Act) do mandate mediation, this does not extinguish the parties' right to walk away from the process or decline to settle during mediation. In mandatory mediation, voluntariness may be weakened, mediators may prioritise closures over quality outcomes, and parties may feel indirectly pressured to settle. The mediation process in India does not strictly adhere to confidentiality protocols. Although mediation sessions are confidential, the resolution reached during these sessions is not privileged and can be used as evidence in a legal proceeding.

The focus on “settlement numbers” has created the perception that mediation is a disposal mechanism for court pendency rather than a genuinely consensual dispute-resolution process.

The next major challenge is the unethical practices by lawyers and mediators who benefit from giving advice that, instead of solving the dispute, makes it even more complicated; hence, mediation is completely ignored for mere monetary benefits, making legal issues more complicated, and this improper supervision creates a loophole for lawyers and mediators to use it for their personal benefit and neglect the basic principle of mediation.

The Mediation and Conciliation Project Committee (MCPC), established by the Supreme Court of India and serving as the authoritative data repository, has not published any consolidated national report in the public domain. Though under Phase 1, the SOP required all High Courts to transmit data regarding total matters referred to mediation and total matters settled to the MCPC on designated fortnightly dates – August 4, 11, 18 and 25 and September 1, 8, 15 and 22, 2025 – and a final compilation was to be submitted to the MCPC by October 6, 2025, the MCPC has not published a consolidated national report in the public domain. According to reports, given the volume of information, the MCPC has analysed data from only 14 high courts, while analysis of the rest is pending. Even NALSA has not published a dedicated post-campaign report specifically on the Mediation for the Nation drive. However, some State Legal Services Authorities have published their own data through press releases or on their websites. Sikkim (SLSA) has reported that 213 cases were referred, out of which only 43 settled; 170 remained unsettled and were referred to the court. Nagaland (NSLSA) reported that 397 cases were referred by the District Legal Services Authorities and the High Court Legal Services Committee, out of which 90 matters were amicably settled. Telangana (TSLSA) reported through the press that 42,129 cases were identified under the drive, out of which 12,891 were referred for mediation and only 1,416 cases were settled – a settlement rate of approximately 11%. The only near-national figure comes from an investigative report published by The Print on October 23, 2025. It reports that 5 lakh cases were sent to court-attached mediation centres after being identified as having the “potential for settlement” out of 1.68 crore cases. Of these 5 lakh cases, 1 lakh were reported as settled, with matrimonial cases accounting for the highest number of settlements, followed by cheque-bounce cases.

To address these issues, the Central Government enacted the Mediation Act, 2023. It established the Mediation Council of India under Section 32 of the Mediation Act, 2023, with its head office in Delhi or any other place notified by the Central Government. It consists of a chairperson, two full-time members, three ex-officio members, a part-time member representing commerce and industry, and a Chief Executive Officer. Except for ex-officio members, the tenure is four years, with eligibility for re-appointment. Under Sections 38 and 39, the Council is responsible for promoting and regulating domestic and international mediation, prescribing mediation procedures, establishing standards for mediator education, certification and ethical conduct, regulating the registration and recognition of mediators and mediation institutions, conducting training and workshops, publishing research and data, maintaining an electronic depository of mediated settlement agreements, and performing other functions assigned by the Central Government.

But changes on paper alone didn’t address the challenges. Changes must be implemented, and out-of-the-box thinking is needed to build a strong mediation infrastructure.

Some good initiatives that should be followed for strong mediation infrastructure and awareness about mediation are:

The Mediation Act, 2023 also includes a community mediation initiative. The District Legal Services Authority (DLSA), Durg, inaugurated a five-day Community Mediation Training Programme under the National Legal Services Authority's (NALSA) Community Mediation Towards a Litigation-Free Rural India Standard Operating Procedure (SOP), 2026. The programme was held from 25 to 29 July 2026 at the District & Sessions Court, Durg, and aimed to strengthen community-based dispute resolution through mediation and promote the peaceful settlement of disputes at the village level.

Encouraging collaborative interaction between states, which excelled in mediation; for example, the Kerala State Mediation and Conciliation Centre emerged as one of the leading contributors to the nationwide “Mediation for the Nation 2.0” campaign, organised by the Mediation and Conciliation Project Committee of the Supreme Court of India from 2 January 2026 to 15 June 2026, by facilitating the settlement of 12,331 cases through mediation. The campaign, conducted under the aegis of 25 High Courts across 28 States and 8 Union Territories, resulted in the amicable resolution of more than one lakh cases nationwide, with Kerala making a significant contribution to this remarkable achievement.

During the campaign, Kerala settled 12,389 of 27,493 cases mediated, achieving a success rate of 44%. The State's performance included the resolution of several pending disputes in 13 categories, namely Matrimonial Dispute Cases, Accident Claim cases, Cheque Bounce Cases, Criminal Compoundable cases, Land Acquisition Cases, Partition Case, Eviction Cases, Commercial Disputes, Service Matters, Labour Act Cases, Contract Cases, Consumer Disputes and other suitable civil Cases.

Strong institutions, such as the Central Government's recently established Mediation Council of India, can be seen as a positive step toward improving mediation infrastructure in India, provided it works independently and focuses on the challenges discussed above.

Public awareness programmes like Lok Adalat’s popularity, which increased such campaigns; similar campaigns should be organised for mediation to raise public awareness and build trust.

Opening up mediators' training centres to train mediators in specific fields where mediation is required. Mediation should be developed as a profession to encourage participation and develop the specific skills required for better mediation. Strict supervision of the court or an independent body over the mediation process should also be mandatory to regulate and check unethical practices by mediators and party advocates.

Strong institutions that ensure accountability and transparency are key to resilience and earning citizens' trust. Improving mediation infrastructure in India is ongoing, but it needs to be citizen-centric, and implementation through continuing amendments alone will not align the mediation law with modern developments.